F. Debt

Debt consists of the following:

	December 31, 2016				December 31, 2015
	Carrying		Fair Value		Carrying		Fair Value
	Value		Level 2		Value		Level 2
(In thousands)
4.5% Convertible note	$	109,835	$	111,525	$	-	$	-
AC 4% PIK Note		100,000		100,930		250,000		250,000
Loan from GGCP		-		-		35,000		35,000
5.875% Senior notes		24,120		24,558		24,097		24,437
Total	$	233,955	$	237,013	$	309,097	$	309,437

4.5% Convertible Note

On August 15, 2016, the Company issued via a private placement a 5-year, $110 million convertible note (“Convertible Note”) to Cascade Investment, L.L.C. The note bears interest at a rate of 4.5% per annum and is convertible into shares of the Company’s Class A Common stock (“Class A Stock”) at an initial conversion price of $55.00 per share. The Convertible Note is initially convertible into two million shares of the Company’s Class A Stock, subject to adjustment pursuant to the terms of the Convertible Note. The Company is required to repurchase the Convertible Note at the request of the holder on specified dates or after certain circumstances involving a Fundamental Change (as defined in the Convertible Note). The Company has the option to repurchase, in whole or in part (must be at least 50%), the Convertible Note at $101 on or after February 15, 2019. The Company recorded $174,000 of costs in connection with the issuance of the Convertible Note that will be amortized over the five year life. GGCP, Inc. (“GGCP”), which owns approximately 62 % of the equity interest of the Company, has deposited cash equal to the principal amount of the Note and six months interest (“Initial Deposit”) into an escrow account established pursuant to an escrow agreement by and among GGCP, the Company, the Convertible Note holder and the escrow agent. In connection with the Initial Deposit made by GGCP, the Company has agreed that GGCP has a right to demand payment in an amount equal to any funds withdrawn from the escrow account by the Convertible Note holder.

AC 4% PIK Note

In connection with the spin-off of AC on November 30, 2015, the Company issued a $250 million promissory note (the “AC 4% PIK Note”) payable to AC. The AC 4% PIK Note bears interest at 4.0% per annum. The original principal amount has a maturity date of November 30, 2020. Interest on the AC 4% PIK Note will accrue from the date of the last interest payment, or if no interest has been paid, from the effective date of the AC 4% PIK Note. At the election of the Company, payment of interest on the AC 4% PIK Note may be paid in kind (in whole or in part) on the then-outstanding principal amount (a “PIK Amount”) in lieu of cash. All PIK Amounts added to the outstanding principal amount of the AC 4% PIK Note will mature on the fifth anniversary from the date the PIK Amount was added to the outstanding principal of the AC 4% PIK Note. In no event may any interest be paid in kind subsequent to November 30, 2019. The Company may prepay the AC 4% PIK Note (in whole or in part) prior to maturity without penalty.

During 2016, the Company prepaid $150 million of principal of the AC 4% PIK Note. $50 million of the prepayment was applied against the principal amount due on November 30, 2016, $40 million against the principal amount due on November 30, 2017, $30 million against the principal amount due on November 30, 2018, and $30 million against the principal amount due on November 30, 2019. Of the $100 million principal amount outstanding at December 31, 2016, $10 million is due on November 30, 2017, $20 million is due on November 30, 2018, $20 million is due on November 30, 2019, and $50 million is due on November 30, 2020.

5.875% Senior notes

On May 31, 2011, the Company issued $100 million of senior unsecured notes (“Senior Notes”) at par. The net proceeds of $99.1 million are being used for working capital and general corporate purposes, which may include acquisitions and seed investments. The issuance costs of $0.9 million have been capitalized and will be amortized over the term of the debt or pro rata upon a repurchase. The notes mature on June 1, 2021 and bear interest at 5.875% per annum, payable semi-annually on June 1 and December 1 of each year and commenced on December 1, 2011. Upon a change of control triggering event, as defined in the indenture, the Company is required to offer to repurchase the notes at 101% of their principal amount.

On November 18, 2015, the Company commenced a tender offer (the “Offer”) to purchase for cash up to $100 million aggregate principal amount of the Senior Notes at a price of 101% of the principal amount. $75.8 million of face value Senior Notes were tendered upon the expiration of the Offer. The tender was accounted for as an extinguishment of debt and resulted in a loss of $0.8 million and is included in extinguishment of debt on the consolidated statements of income. In connection with the tender, the Company also expensed $0.4 million of pro rata unamortized issuance costs which was included in interest expense on the consolidated statements of income. At December 31, 2016 and 2015, the debt was recorded at its face value, net of issuance costs, of $24.1 million and $24.1 million, respectively.

Loan from GGCP

In connection with the Offer, the Company borrowed $35.0 million from GGCP. The loan had a term of one year and bore interest at 90-day LIBOR plus 3.25%, reset and payable quarterly. On March 18, 2016, the Company paid back $15.0 million of the loan. During the second quarter of 2016 the Company paid back the remaining $20.0 million of the loan. At December 31, 2015, the debt was recorded at its face value of $35.0 million.

Zero coupon Subordinated debentures due December 31, 2015

On December 31, 2010, the Company issued $86.4 million in par value of five year zero coupon subordinated debentures due December 31, 2015 (“Debentures”) to its shareholders of record on December 15, 2010 through the declaration of a special dividend of $3.20 per share. The Debentures had a par value of $100 and were callable at the option of the Company, in whole or in part, at any time or from time to time, at a redemption price equal to 100% of the principal amount of the Debentures to be redeemed. During 2015 and 2014, the Company repurchased 62,242 Debentures and 7,178 Debentures, respectively, having a face value of $6.2 million and $0.7 million, respectively. The redemptions in 2015 and 2014 were accounted for as an extinguishment of debt and resulted in a loss of $0.3 million and $0.1 million, respectively, which was included in extinguishment of debt on the consolidated statements of income. The debt was being accreted to its face value using the effective rate on the date of issuance of 7.45%. The debt matured on December 31, 2015 and was fully paid at that time.

The fair value of the Company’s debt, which is a Level 2 valuation, is estimated based on either quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities or using market standard models. Inputs into these models include credit rating, maturity and interest rate.